Instructions Note: This problem is for the 2020 tax year. Janice Morgan, age 24, is single and has no dependents. She is a freelance writer. In January 2020, Janice opened her own office located at 2751 Waldham Road, Pleasant Hill, NM 88135. She called her business Writers Anonymous. Janice is a cash basis taxpayer. She lives at 132 Stone Avenue, Pleasant Hill, NM 88135. Her Social Security number is 123-45-6782. Janice's parents continue to provide health insurance for her under their policy. Janice did not engage in any virtual currency transactions during the year and wants to contribute to the Presidential Election Campaign Fund. Janice received the appropriate coronavirus recovery rebates (economic impact payments); related questions in ProConnect Tax should be ignored. During 2020, Janice reported the following income and expense items connected with her business. Income from sale of articles $95,000 Rent 16,500 Utilities 7,900 1,800 Supplies Insurance 5,000 Travel (including meals of $1,200) 3,500 Janice purchased and placed in service the following fixed assets for her business. Janice wants to elect immediate expensing under $ 179, if possible. Furniture and fixtures (new) costing $21,000 on January 10 Computer equipment (new) costing $12,400 on July 28 . Janice's itemized deductions include: State income tax $2,950 Instructions Janice purchased and placed in service the following fixed assets for her business. Janice wants to elect immediate expensing under $ 179, if possible. Furniture and fixtures (new) costing $21,000 on January 10 Computer equipment (new) costing $12,400 on July 28 Janice's itemized deductions include: State income tax $2,950 8,000 Home mortgage interest paid to First National Bank Property taxes on home 2,500 Charitable contribution to her alma mater, State College 1,200 Janice did not keep a record of the sales tax she paid. The amount allowed by the sales tax table is $437. Janice reports interest income of $4,000 on certificates of deposit at Second National Bank. She made estimated tax payments of $5,000 for 2020. Required: Compute Janice Morgan's 2020 Federal income tax payable (or refund due). Make realistic assumptions about any missing data. If an amount box does not require an entry or the answer is zero, enter "o". Enter all amounts as positive numbers. The taxpayer wants $3 to go to the to Presidential Election Campaign. It may be necessary to complete the other tax forms and schedules before completing Form 1040. Use the tax schedules (not the tax tables) included with this problem to compute the tax. If required, round your final answers to the nearest dollar. Part II Optional Methods To Figure Net Earnings (see instructions) Farm Optional Method. You may use this method only if (a) your gross farm income (1) wasn't more than $8,460, or (b) your net farm profits(2) were less than $6,107. 14 Maximum income for optional methods .. 14 25,396 X 15 Enter the smaller of: two-thirds (2/3) of gross farm income(1) (not less than zero) or $5,640. Also, include this amount on line 4b above .. 15 Nonfarm Optional Method. You may use this method only if (a) your net nonfarm profits(3) were less than $6,107 and also less than 72.189% of your gross nonfarm income, (4) and (b) you had net earnings from self- employment of at least $400 in 2 of the prior 3 years. Caution: You may use this method no more than five times. 16 Subtract line 15 from line 14. ..... 16 17 17 Enter the smaller of: two-thirds (2/3) of gross nonfarm income(4) (not less than zero) or the amount on line 16. Also, include this amount on line 4b above (1) From Sch. F, line 9; and Sch. K-1 (Form 1065), box 14, code B. (3) From Sch. C, line 31; and Sch. K-1 (Form 1065), box 14, code A. (2) From Sch. F, line 34; and Sch. K-1 (Form 1065), box 14, code A (4) From Sch. C, line 7; and Sch. K-1 (Form 1065), box 14, code C. -minus the amount you would have entered on line 1b had you not used the optional method . . Schedule SE (Form 1040) 2020 Janice Morgan 123-45-6782 Attachment Sequence No. 17 Page 2 Part III Maximum Deferral of Self-Employment Tax Payments If line 4c is zero, skip lines 18 through 20, and enter -o- on line 21. 18 Enter the portion of line 3 that can be attributed to March 27, 2020, through December 31, 2020. 18 0 19 If line 18 is more than zero, multiply line 18 by 92.35% (0.9235); otherwise, enter the amount from line 18 .. 19 0 20 Enter the portion of lines 15 and 17 that can be attributed to March 27, 2020, through December 31, 2020... 20 21 Combine lines 19 and 20 21 0 If line 5b is zero, skip line 22 and enter -o- on line 23. 22 Enter the portion of line 5a that can be attributed to March 27, 2020, through December 31, 2020 22 23 23 Multiply line 22 by 92.35% (0.9235). 0 24 Add lines 21 and 23 .. 24 0 25 Enter the smaller of line 9 or line 24. 25 19,779 x 26 Multiply line 25 by 6.2% (0.062). Enter here and see the instructions for line 12e of Schedule 3 (Form 1040). 26 1,226 x BAA Schedule SE (Form 1040) 2020 Feedback Instructions Note: This problem is for the 2020 tax year. Janice Morgan, age 24, is single and has no dependents. She is a freelance writer. In January 2020, Janice opened her own office located at 2751 Waldham Road, Pleasant Hill, NM 88135. She called her business Writers Anonymous. Janice is a cash basis taxpayer. She lives at 132 Stone Avenue, Pleasant Hill, NM 88135. Her Social Security number is 123-45-6782. Janice's parents continue to provide health insurance for her under their policy. Janice did not engage in any virtual currency transactions during the year and wants to contribute to the Presidential Election Campaign Fund. Janice received the appropriate coronavirus recovery rebates (economic impact payments); related questions in ProConnect Tax should be ignored. During 2020, Janice reported the following income and expense items connected with her business. Income from sale of articles $95,000 Rent 16,500 Utilities 7,900 1,800 Supplies Insurance 5,000 Travel (including meals of $1,200) 3,500 Janice purchased and placed in service the following fixed assets for her business. Janice wants to elect immediate expensing under $ 179, if possible. Furniture and fixtures (new) costing $21,000 on January 10 Computer equipment (new) costing $12,400 on July 28 . Janice's itemized deductions include: State income tax $2,950 Instructions Janice purchased and placed in service the following fixed assets for her business. Janice wants to elect immediate expensing under $ 179, if possible. Furniture and fixtures (new) costing $21,000 on January 10 Computer equipment (new) costing $12,400 on July 28 Janice's itemized deductions include: State income tax $2,950 8,000 Home mortgage interest paid to First National Bank Property taxes on home 2,500 Charitable contribution to her alma mater, State College 1,200 Janice did not keep a record of the sales tax she paid. The amount allowed by the sales tax table is $437. Janice reports interest income of $4,000 on certificates of deposit at Second National Bank. She made estimated tax payments of $5,000 for 2020. Required: Compute Janice Morgan's 2020 Federal income tax payable (or refund due). Make realistic assumptions about any missing data. If an amount box does not require an entry or the answer is zero, enter "o". Enter all amounts as positive numbers. The taxpayer wants $3 to go to the to Presidential Election Campaign. It may be necessary to complete the other tax forms and schedules before completing Form 1040. Use the tax schedules (not the tax tables) included with this problem to compute the tax. If required, round your final answers to the nearest dollar. Part II Optional Methods To Figure Net Earnings (see instructions) Farm Optional Method. You may use this method only if (a) your gross farm income (1) wasn't more than $8,460, or (b) your net farm profits(2) were less than $6,107. 14 Maximum income for optional methods .. 14 25,396 X 15 Enter the smaller of: two-thirds (2/3) of gross farm income(1) (not less than zero) or $5,640. Also, include this amount on line 4b above .. 15 Nonfarm Optional Method. You may use this method only if (a) your net nonfarm profits(3) were less than $6,107 and also less than 72.189% of your gross nonfarm income, (4) and (b) you had net earnings from self- employment of at least $400 in 2 of the prior 3 years. Caution: You may use this method no more than five times. 16 Subtract line 15 from line 14. ..... 16 17 17 Enter the smaller of: two-thirds (2/3) of gross nonfarm income(4) (not less than zero) or the amount on line 16. Also, include this amount on line 4b above (1) From Sch. F, line 9; and Sch. K-1 (Form 1065), box 14, code B. (3) From Sch. C, line 31; and Sch. K-1 (Form 1065), box 14, code A. (2) From Sch. F, line 34; and Sch. K-1 (Form 1065), box 14, code A (4) From Sch. C, line 7; and Sch. K-1 (Form 1065), box 14, code C. -minus the amount you would have entered on line 1b had you not used the optional method . . Schedule SE (Form 1040) 2020 Janice Morgan 123-45-6782 Attachment Sequence No. 17 Page 2 Part III Maximum Deferral of Self-Employment Tax Payments If line 4c is zero, skip lines 18 through 20, and enter -o- on line 21. 18 Enter the portion of line 3 that can be attributed to March 27, 2020, through December 31, 2020. 18 0 19 If line 18 is more than zero, multiply line 18 by 92.35% (0.9235); otherwise, enter the amount from line 18 .. 19 0 20 Enter the portion of lines 15 and 17 that can be attributed to March 27, 2020, through December 31, 2020... 20 21 Combine lines 19 and 20 21 0 If line 5b is zero, skip line 22 and enter -o- on line 23. 22 Enter the portion of line 5a that can be attributed to March 27, 2020, through December 31, 2020 22 23 23 Multiply line 22 by 92.35% (0.9235). 0 24 Add lines 21 and 23 .. 24 0 25 Enter the smaller of line 9 or line 24. 25 19,779 x 26 Multiply line 25 by 6.2% (0.062). Enter here and see the instructions for line 12e of Schedule 3 (Form 1040). 26 1,226 x BAA Schedule SE (Form 1040) 2020 Feedback